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8-K - 8-K - ARES CAPITAL CORP | a2197910z8-k.htm |
EX-99.1 - EXHIBIT 99.1 - ARES CAPITAL CORP | a2197910zex-99_1.htm |
EX-10.1 - EXIBIT 10.1 - ARES CAPITAL CORP | a2197910zex-10_1.htm |
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Ares Capital Corporation and Subsidiaries
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2009
Unaudited
(in thousands, except share and per share data)
|
Ares Capital |
|
Adjusted Allied Capital (A)* |
|
Pro Forma Adjustments |
|
Ares Capital Pro Forma Combined |
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Assets and Liabilities Data: |
||||||||||||||||||||||
Investments |
$ | 2,171,814 | $ | 1,975,046 | $ | (140,587 | ) | B* | $ | 4,006,273 | ||||||||||||
Cash and cash equivalents |
99,227 | 138,418 | (45,086 | ) | C | 85,546 | ||||||||||||||||
|
(107,013 | ) | B | |||||||||||||||||||
Other assets |
42,474 | 124,698 | (13,630 | ) | B | 153,542 | ||||||||||||||||
Total assets |
$ | 2,313,515 | $ | 2,238,162 | $ | (306,316 | ) | $ | 4,245,361 | |||||||||||||
Debt |
$ | 969,465 | $ | 995,544 | $ | (111,115 | ) | B | $ | 1,758,097 | ||||||||||||
|
(95,797 | ) | B | |||||||||||||||||||
Other liabilities |
86,162 | 41,284 | 38,690 | B | 166,136 | |||||||||||||||||
Total liabilities |
1,055,627 | 1,036,828 | (168,222 | ) | 1,924,233 | |||||||||||||||||
Stockholders' equity |
1,257,888 | 1,201,334 | (140,587 | ) | B | 2,321,128 | ||||||||||||||||
|
(45,086 | ) | C | |||||||||||||||||||
|
(49,906 | ) | B | |||||||||||||||||||
|
(13,630 | ) | B | |||||||||||||||||||
|
111,115 | B | ||||||||||||||||||||
Total liabilities and stockholders' equity |
$ | 2,313,515 | $ | 2,238,162 | $ | (306,316 | ) | $ | 4,245,361 | |||||||||||||
Total shares outstanding |
109,944,674 | 179,940,040 | 58,480,513 | I | 168,425,187 | |||||||||||||||||
Net assets per share |
$ | 11.44 | $ | 6.68 | $ | (2.40 | ) | $ | 13.78 | |||||||||||||
- *
- Please see Note 3 of the accompanying notes to pro forma condensed consolidated financial statements on page 33.
1
Ares Capital Corporation and Subsidiaries
Pro Forma Condensed Consolidated Income Statement
For the Year Ended December 31, 2009
Unaudited
(in thousands, except share and per share data)
|
Actual Ares Capital |
Actual Allied Capital |
Pro Forma Adjustments |
|
Ares Capital Pro Forma Combined |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Performance Data: |
||||||||||||||||
Interest and dividend income |
$ | 229,169 | $ | 290,986 | $ | | D* | $ | 520,155 | |||||||
Fees and other income |
16,103 | 27,700 | | 43,803 | ||||||||||||
Total investment income |
245,272 | 318,686 | | 563,958 | ||||||||||||
Interest and credit facility fees |
24,262 | 171,068 | | E | 195,330 | |||||||||||
Base management fees |
30,409 | | 43,039 | F | 73,448 | |||||||||||
Incentive management fees |
33,332 | | | G | 33,332 | |||||||||||
Other expenses |
23,287 | 86,479 | (38,711 | ) | H | 71,055 | ||||||||||
Total expenses |
111,290 | 257,547 | 4,327 | 373,164 | ||||||||||||
Net investment income before taxes |
133,982 | 61,139 | (4,327 | ) | 190,794 | |||||||||||
Income tax expense |
576 | 5,576 | | 6,152 | ||||||||||||
Net investment income |
133,406 | 55,563 | (4,327 | ) | 184,642 | |||||||||||
Net realized gains (losses) |
(45,963 | ) | (361,128 | ) | | (407,091 | ) | |||||||||
Net unrealized gains (losses) |
88,707 | (176,689 | ) | | (87,982 | ) | ||||||||||
Net realized and unrealized gains (losses) |
42,744 | (537,817 | ) | | (495,073 | ) | ||||||||||
Gain on extinguishment of debt |
26,543 | 83,532 | | 110,075 | ||||||||||||
Loss on extinguishment of debt |
| (122,776 | ) | | (122,776 | ) | ||||||||||
Net increase (decrease) in stockholders' equity |
$ | 202,693 | $ | (521,498 | ) | $ | (4,327 | ) | $ | (323,132 | ) | |||||
Weighted average shares outstanding |
101,719,800 | 178,994,228 | 58,480,513 | I | 160,200,313 | |||||||||||
Earnings (loss) per share |
$ | 1.99 | $ | (2.91 | ) | $ | (0.07 | ) | $ | (2.02 | ) | |||||
- *
- Please see Note 3 of the accompanying notes to pro forma condensed consolidated financial statements on page 33.
2
Pro Forma Schedule of Investments
As of December 31, 2009
Unaudited
(Dollar Amounts in Thousands)
|
|
|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Financial | ||||||||||||||||||||||||
AGILE Fund I, LLC(4) | Investment company | Member interest | $ | 637 | $ | 449 | $ | 637 | $ | 449 | ||||||||||||||
AllBridge Financial, LLC(4) | Investment company | Senior secured loan (6.3%, due 4/10) | 1,500 | 1,500 | 1,500 | 1,500 | ||||||||||||||||||
Common equity | 40,118 | 15,805 | 40,118 | 15,805 | ||||||||||||||||||||
BB&T Capital Partners/Windsor Mezzanine Fund, LLC(5) | Investment company | Member interest | 11,789 | 10,379 | 11,789 | 10,379 | ||||||||||||||||||
Callidus Capital Corporation(4) | Investment company | Senior subordinated note (18.0%, due 8/13)(2) | 21,782 | 19,108 | 21,782 | 19,108 | ||||||||||||||||||
Common stock (100 shares) | | | | | ||||||||||||||||||||
Guaranty ($3,189) | | | | | ||||||||||||||||||||
Callidus Debt Partners CDO Fund I, Ltd. | Investment company | Class C notes (12.9%, due 12/13)(3) | 19,527 | 2,163 | 19,527 | 2,163 | ||||||||||||||||||
Class D notes (17.0%, due 12/13)(3) | 9,454 | | 9,454 | | ||||||||||||||||||||
Callidus Debt Partners CLO Fund III, Ltd. | Investment company | Preferred stock (23,600,000 shares) | 20,138 | 4,112 | 20,138 | 4,112 | ||||||||||||||||||
Callidus Debt Partners CLO | Investment company | Class D notes (4.8%, due 4/20) | 2,206 | 1,710 | 2,206 | 1,710 | ||||||||||||||||||
Fund IV, Ltd. | Income notes (0.0%) | 14,859 | 5,433 | 14,859 | 5,433 | |||||||||||||||||||
Callidus Debt Partners CLO Fund V, Ltd. | Investment company | Income notes (1.4%) | 13,432 | 5,012 | 13,432 | 5,012 | ||||||||||||||||||
Callidus Debt Partners CLO | Investment company | Class D notes (6.3%, due 10/21) | 7,809 | 4,256 | 7,809 | 4,256 | ||||||||||||||||||
Fund VI, Ltd. | Income notes (0.0%) | 29,144 | 4,978 | 29,144 | 4,978 | |||||||||||||||||||
Callidus Debt Partners CLO Fund VII, Ltd. | Investment company | Income notes (0.0%) | 24,824 | 7,148 | 24,824 | 7,148 | ||||||||||||||||||
Callidus MAPS CLO | Investment company | Class E notes (5.8%, due 12/17) | 17,000 | 11,695 | 17,000 | 11,695 | ||||||||||||||||||
Fund I LLC | Income notes (0.0%) | 38,509 | 14,119 | 38,509 | 14,119 | |||||||||||||||||||
Callidus MAPS CLO | Investment company | Class D notes (4.5%, due 7/22) | 3,880 | 3,215 | 3,880 | 3,215 | ||||||||||||||||||
Fund II, Ltd. | Income notes (2.5%) | 17,824 | 6,310 | 17,824 | 6,310 | |||||||||||||||||||
Carador PLC(5) | Investment company | Ordinary shares (7,110,525 shares) | $ | 9,033 | $ | 2,489 | 9,033 | 2,489 | ||||||||||||||||
Catterton Partners VI, L.P. | Investment partnership | Limited partnership interest | 3,327 | 2,014 | 3,327 | 2,014 | ||||||||||||||||||
CIC Flex, LP | Investment partnership | Limited partnership units (0.69 units) | 41 | 41 | 41 | 41 | ||||||||||||||||||
Ciena Capital LLC(4) | Investment banking services | Senior secured loan (5.5%, due 3/09)(3) | 319,031 | 100,051 | 319,031 | 100,051 | ||||||||||||||||||
Class B equity interest | 119,436 | | 119,436 | | ||||||||||||||||||||
Class C equity interest | 109,097 | | 109,097 | | ||||||||||||||||||||
Guaranty ($5,000) | | | | |
3
|
|
|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Commercial Credit Group, Inc. | Commercial equipment finance and leasing | Senior subordinated note (15.0%, due 6/15) | 21,970 | 21,970 | 21,970 | 21,970 | ||||||||||||||||||
company | Preferred stock (64,679 shares) | 15,543 | 6,005 | 15,543 | 6,005 | |||||||||||||||||||
Warrants | | | | | ||||||||||||||||||||
Cortec Group Fund IV, L.P. | Investment partnership | Limited partnership interest | 6,390 | 3,917 | 6,390 | 3,917 | ||||||||||||||||||
Covestia Capital Partners, LP | Investment partnership | Limited partnership units | 1,059 | 1,059 | 1,059 | 1,059 | ||||||||||||||||||
Direct Capital Corporation(4) | Commercial equipment finance and leasing | Senior secured loan (8.0%, due 1/14)(3) | 8,175 | 8,744 | 8,175 | 8,744 | ||||||||||||||||||
company | Senior subordinated note (16.0%, due 3/13)(3) | 55,496 | 6,797 | 55,496 | 6,797 | |||||||||||||||||||
Common stock (2,317,020 shares) | 25,732 | | 25,732 | | ||||||||||||||||||||
Dryden XVIII Leveraged Loan 2007 Limited | Investment company | Class B notes (4.8%, due 10/19)(3) | 7,497 | 2,115 | 7,497 | 2,115 | ||||||||||||||||||
Income notes (0.0%) | 23,164 | 2,427 | 23,164 | 2,427 | ||||||||||||||||||||
Dynamic India Fund IV | Investment company | Common equity | 9,350 | 8,224 | 9,350 | 8,224 | ||||||||||||||||||
eCentury Capital Partners, L.P. | Investment partnership | Limited partnership interest | 7,274 | | 7,274 | | ||||||||||||||||||
Fidus Mezzanine Capital, L.P. | Investment partnership | Limited partnership interest | 14,720 | 9,921 | 14,720 | 9,921 | ||||||||||||||||||
Financial Pacific Company(4) | Commercial property and | Senior subordinated loan (17.0%, due 2/12)(2) | 58,870 | 34,780 | 58,870 | 34,780 | ||||||||||||||||||
casualty insurance provider | Junior subordinated loan (20.0% due 8/12)(2) | 10,010 | | 10,010 | | |||||||||||||||||||
Preferred stock (9,458 shares) | 8,865 | | 8,865 | | ||||||||||||||||||||
Common stock (12,711 shares) | 12,783 | | 12,783 | | ||||||||||||||||||||
Firstlight Financial Corporation(5) | Investment company | Senior subordinated note (1.0%, due 12/16)(2) | 73,032 | 54,808 | 73,032 | 54,808 | ||||||||||||||||||
Common stock (40,000 shares) | 40,000 | | 40,000 | | ||||||||||||||||||||
HCI Equity, LLC(4) | Investment company | Member interest | 1,100 | 877 | 1,100 | 877 | ||||||||||||||||||
Ivy Hill Asset Management, L.P.(4) | Investment manager | Member interest | 37,176 | 48,321 | 37,176 | 48,321 | ||||||||||||||||||
Ivy Hill Middle Market Credit Fund, Ltd.(4) | Investment company | Class B deferrable interest notes (6.3%, due 11/18) | 40,000 | 36,800 | 40,000 | 36,800 | ||||||||||||||||||
Subordinated notes (18.0%, due 11/18) | 15,681 | 14,583 | 15,681 | 14,583 | ||||||||||||||||||||
Imperial Capital Group, LLC and Imperial | Investment banking services | Limited partnership interest | 6,094 | 5,663 | 6,094 | 5,663 | ||||||||||||||||||
Capital Private Opportunities, LP(5) | Common units (10,551 units) | 15,000 | 18,403 | 15,000 | 18,403 | |||||||||||||||||||
Knightsbridge CLO | Investment company | Class E notes (9.3%, due 1/22) | 18,700 | 11,360 | 18,700 | 11,360 | ||||||||||||||||||
2007-1 Ltd.(4) | Income notes (4.4%) | 39,174 | 16,220 | 39,174 | 16,220 | |||||||||||||||||||
Knightsbridge CLO | Investment company | Class C notes (7.8%, due 6/18) | 12,800 | 12,289 | 12,800 | 12,289 | ||||||||||||||||||
2008-1 Ltd.(4) | Class D notes (8.8%, due 6/18) | 8,000 | 7,160 | 8,000 | 7,160 | |||||||||||||||||||
Class E notes (5.3%, due 6/18) | 11,291 | 10,091 | 11,291 | 10,091 | ||||||||||||||||||||
Income notes (20.8%) | 21,893 | 20,637 | 21,893 | 20,637 | ||||||||||||||||||||
Kodiak Fund LP | Investment partnership | Limited partnership interest | 9,323 | 1,917 | 9,323 | 1,917 | ||||||||||||||||||
Novak Biddle Venture Partners III, L.P. | Investment partnership | Limited partnership interest | 2,018 | 1,070 | 2,018 | 1,070 | ||||||||||||||||||
Pangaea CLO 2007-1 Ltd. | Investment company | Class D notes (5.0%, due 1/21) | 12,119 | 6,651 | 12,119 | 6,651 | ||||||||||||||||||
Partnership Capital Growth Fund I, LP | Investment partnership | Limited partnership interest | 3,045 | 3,045 | 3,045 | 3,045 |
4
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Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
SPP Mezzanine Funding II, L.P. | Investment partnership | Limited partnership interest | 7,476 | 7,145 | 7,476 | 7,145 | ||||||||||||||||||
Senior Secured Loan Fund LLC(4) | Investment partnership | Subordinated certificates (16.2%, due 12/15) | 165,000 | 165,000 | 165,000 | 165,000 | ||||||||||||||||||
Trivergence Capital Partners, LP | Investment partnership | Limited partnership interest | 2,016 | 2,016 | 2,016 | 2,016 | ||||||||||||||||||
VSC Investors LLC | Investment company | Member interest | 648 | 648 | 648 | 648 | ||||||||||||||||||
Webster Capital II, L.P. | Investment partnership | Limited partnership interest | 1,742 | 1,235 | 1,742 | 1,235 | ||||||||||||||||||
Total | 407,825 | 352,876 | 1,276,798 | 421,009 | 1,684,623 | 773,885 | ||||||||||||||||||
Business Services | ||||||||||||||||||||||||
BenefitMall Holdings, Inc. | Employee benefits broker services company | Senior subordinated note (18.0%, due 6/14)(2) | 40,254 | 40,254 | 40,254 | 40,254 | ||||||||||||||||||
Common stock (39,274,290 shares) | 39,274 | 68,822 | 39,274 | 68,822 | ||||||||||||||||||||
Warrants | | | | | ||||||||||||||||||||
Booz Allen Hamilton, Inc. | Strategy and technology consulting services | Senior secured loan (7.5%, due 7/15) | 727 | 741 | 727 | 741 | ||||||||||||||||||
Senior subordinated loan (13.0%, due 7/16)(2) | 12,541 | 12,650 | 12,541 | 12,650 | ||||||||||||||||||||
CitiPostal Inc.(4) | Document storage and management services | Senior secured revolving loan (3.7%, due 12/13) | 683 | 683 | 683 | 683 | ||||||||||||||||||
Senior secured loan (12.0%, due 12/13)(2) | 50,633 | 50,633 | 50,633 | 50,633 | ||||||||||||||||||||
Senior subordinated note (16.0%, due 12/15)(2) | 10,685 | 10,685 | 10,685 | 10,685 | ||||||||||||||||||||
Common stock (37,024 shares) | 12,726 | 1,432 | 12,726 | 1,432 | ||||||||||||||||||||
Cook Inlet Alternative Risk, LLC | Risk management services | Senior secured loan (13.0%, due 4/13) | 87,309 | 62,100 | 87,309 | 62,100 | ||||||||||||||||||
Member interest | 552 | | 552 | | ||||||||||||||||||||
Digital VideoStream, LLC | Media content supply chain services company | Senior secured loan (11.0%, due 2/12)(2) | 12,940 | 12,811 | 12,940 | 12,811 | ||||||||||||||||||
Convertible subordinated note (10.0%, due 2/16)(2) | 5,006 | 5,006 | 5,006 | 5,006 | ||||||||||||||||||||
Diversified Mercury Communications, LLC | Business media consulting services | Senior secured loan (6.8%, due 3/13) | 2,657 | 2,391 | 2,657 | 2,391 | ||||||||||||||||||
Impact Innovations Group, LLC(4) | Management consulting services | Member interest | | 215 | | 215 | ||||||||||||||||||
Investor Group Services, LLC(5) | Financial consulting services | Member interest | | 500 | | 500 | ||||||||||||||||||
Market Track Holdings, LLC | Business media consulting services company | Senior secured revolving loan (8.0%, due 6/14) | 2,450 | 2,412 | 2,450 | 2,412 | ||||||||||||||||||
Junior subordinated loan (15.9%, due 6/14)(2) | 24,509 | 23,680 | 24,509 | 23,680 | ||||||||||||||||||||
Multi-Ad Services, Inc.(5) | Marketing services and software provider | Senior secured loan (11.3%, due 11/11) | 2,485 | 2,491 | 2,485 | 2,491 | ||||||||||||||||||
Preferred equity | 1,737 | 1,418 | 1,737 | 1,418 |
5
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Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
MVL Group, Inc.(4) | Marketing research provider | Senior secured loan (12.0%, due 7/12) | 25,256 | 25,260 | 25,256 | 25,260 | ||||||||||||||||||
Senior subordinated loan (14.5%, due 7/12)(2) | 35,578 | 34,306 | 35,578 | 34,306 | ||||||||||||||||||||
Junior subordinated note (8.0%, due 7/12)(3) | 139 | | 139 | | ||||||||||||||||||||
Common stock (560,716 shares) | 555 | | 555 | | ||||||||||||||||||||
PC Helps Support, LLC | Technology support provider | Senior secured loan (4.3%, due 12/13) | 8,092 | 7,756 | 8,092 | 7,756 | ||||||||||||||||||
Junior subordinated loan (12.8%, due 12/13) | 26,633 | 26,490 | 26,633 | 26,490 | ||||||||||||||||||||
Pendum Acquisition, Inc.(5) | Outsourced provider of ATM services | Common stock (8,872 shares) | | 200 | | 200 | ||||||||||||||||||
Pillar Holdings LLC and PHL Holding Co.(5) | Mortgage services | Senior secured revolving loan (5.8%, due 11/13) | 1,313 | 1,313 | 1,313 | 1,313 | ||||||||||||||||||
Senior secured loan (14.5%, due 5/14) | 7,375 | 7,375 | 7,375 | 7,375 | ||||||||||||||||||||
Senior secured loan (5.8%, due 11/13) | 27,208 | 27,208 | 27,208 | 27,208 | ||||||||||||||||||||
Common stock (84.78 shares) | 3,768 | 7,818 | 3,768 | 7,818 | ||||||||||||||||||||
Primis Marketing Group, Inc. and Primis Holdings, LLC(5) | Database marketing services | Senior subordinated note (15.5%, due 2/13)(2)(3) | 10,222 | 511 | 10,222 | 511 | ||||||||||||||||||
Preferred units (4,000 units) | 3,600 | | 3,600 | | ||||||||||||||||||||
Common units (4,000,000 units) | 400 | | 400 | | ||||||||||||||||||||
Prommis Solutions LLC, E-Default Statewide Tax and | Bankruptcy and foreclosure Services, LLC, | Senior subordinated note (13.5%, due 2/14)(2) | 53,156 | 53,156 | 53,156 | 53,156 | ||||||||||||||||||
Title Services, LLC | and processing services | Preferred stock (30,000 shares) | 3,000 | 6,221 | 3,000 | 6,221 | ||||||||||||||||||
Statewide Publishing Services, LLC (formerly known as MR Processing Holding Corp.) | ||||||||||||||||||||||||
Promo Works, LLC | Marketing services | Senior secured loan (16.0%, due 12/12) | 19,859 | 12,557 | 19,859 | 12,557 | ||||||||||||||||||
R2 Acquisition Corp. | Marketing services | Common stock (250,000 shares) | 250 | 250 | 250 | 250 | ||||||||||||||||||
SGT India Private Limited(5) | Technology consulting services | Common stock (150,596 shares) | 4,161 | | 4,161 | | ||||||||||||||||||
Summit Business Media, LLC | Business media consulting services | Junior secured loan (15.0%, due 7/14)(2)(3) | 10,018 | 554 | 10,018 | 554 | ||||||||||||||||||
Summit Energy Services, Inc. | Energy management consulting services | Common stock (415,982 shares) | 1,861 | 2,200 | 1,861 | 2,200 | ||||||||||||||||||
Venturehouse-Cibernet Investors, LLC | Financial settlement services for intercarrier wireless roaming | Equity interest | | | | | ||||||||||||||||||
VSS-Tranzact Holdings, LLC(5) | Management consulting services | Member interest | 10,000 | 7,850 | 10,000 | 7,850 | ||||||||||||||||||
Total | 143,578 | 126,147 | 416,034 | 393,802 | 559,612 | 519,949 | ||||||||||||||||||
Healthcare | ||||||||||||||||||||||||
Air Medical Group Holdings LLC(5) | Medical escort services | Senior secured revolving loan (2.8%, due 3/11) | 6,056 | 5,845 | 6,056 | 5,845 | ||||||||||||||||||
Preferred stock | 2,993 | 19,500 | 2,993 | 19,500 |
6
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Ares Capital | Allied Capital | Pro Forma Ares Capital | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
|||||||||||||||
American Renal Associates, Inc. | Dialysis provider | Senior secured loan (8.5%, due 12/10) | 902 | 902 | 902 | 902 | |||||||||||||||||
Senior secured loan (8.5%, due 12/11) | 10,389 | 10,389 | 10,389 | 10,389 | |||||||||||||||||||
Axium Healthcare Pharmacy, Inc. | Specialty pharmacy provider | Senior subordinated note (8.0%, due 3/15)(2) | 3,036 | 2,641 | 3,036 | 2,641 | |||||||||||||||||
Capella Healthcare, Inc. | Acute care hospital operator | Junior secured loan (13.0%, due 2/16) | 42,500 | 42,500 | 42,500 | 42,500 | |||||||||||||||||
CT Technologies Intermediate Holdings, Inc. and | Healthcare analysis services | Preferred stock (14.0%, 7,427 shares)(2) | 8,467 | 8,043 | 8,467 | 8,043 | |||||||||||||||||
CT Technologies Holdings, LLC(5) | Common stock (11,225 shares) | 4,000 | 8,114 | 4,000 | 8,114 | ||||||||||||||||||
DSI Renal, Inc. | Dialysis provider | Senior secured revolving loan (7.3%, due 3/11) | 7,668 | 7,285 | 7,668 | 7,285 | |||||||||||||||||
Senior secured loan (7.3%, due 3/13) | 12,591 | 16,476 | 12,591 | 16,476 | |||||||||||||||||||
Senior subordinated note (16.0%, due 4/14)(2) | 80,426 | 76,791 | 80,426 | 76,791 | |||||||||||||||||||
GC Merger Sub I, Inc. | Drug testing services | Senior secured loan (4.3%, due 12/14) | 22,379 | 20,997 | 22,379 | 20,997 | |||||||||||||||||
HCP Acquisition Holdings, LLC(4) | Healthcare compliance advisory services | Class A units (10,044,176 units) | 10,044 | 4,256 | 10,044 | 4,256 | |||||||||||||||||
Heartland Dental Care, Inc. | Dental services | Senior subordinated note (14.3%, due 8/13)(2) | 32,717 | 32,717 | 32,717 | 32,717 | |||||||||||||||||
Insight Pharmaceuticals Corporation(4) | OTC drug products manufacturer | Senior subordinated note (15.0%, due 9/12)(2) | 54,385 | 54,023 | 54,385 | 54,023 | |||||||||||||||||
Common stock (155,000 shares) | 40,413 | 9,400 | 40,413 | 9,400 | |||||||||||||||||||
Magnacare Holdings, Inc., Magnacare Administrative Services, LLC, and Magnacare, LLC | Healthcare professional provider | Senior subordinated note (14.8%, due 1/13)(2) | 3,363 | 4,670 | 3,363 | 4,670 | |||||||||||||||||
MPBP Holdings, Inc., Cohr | Healthcare equipment | Senior secured loan (due 1/13) | 489 | 628 | 489 | 628 | |||||||||||||||||
Holdings, Inc., and MPBP Acquisition Co., Inc. | services | Junior secured loan (6.5%, due 1/14) | 32,049 | 8,000 | 32,049 | 8,000 | |||||||||||||||||
Common stock (50,000 shares) | 5,000 | | 5,000 | | |||||||||||||||||||
MWD Acquisition Sub, Inc. | Dental services | Junior secured loan (6.5%, due 5/12) | 5,000 | 4,350 | 5,000 | 4,350 | |||||||||||||||||
OnCURE Medical Corp. | Radiation oncology care provider | Senior secured loan (3.8%, due 6/12) | 3,068 | 2,761 | 3,068 | 2,761 | |||||||||||||||||
Senior subordinated note (12.5%, due 8/13)(2) | 32,664 | 29,378 | 32,664 | 29,378 | |||||||||||||||||||
Common stock (857,143 shares) | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||||||
Passport Health Communications, Inc., | Healthcare technology provider | Senior secured loan (10.5%, due 5/14) | 24,346 | 24,346 | 24,346 | 24,346 | |||||||||||||||||
Passport Holding Corp, and Prism Holding Corp. | Series A preferred stock (1,594,457 shares) | 9,900 | 9,900 | 9,900 | 9,900 | ||||||||||||||||||
Common stock (16,106 shares) | 100 | 100 | 100 | 100 | |||||||||||||||||||
PG Mergersub, Inc. | Provider of patient surveys, management | Senior subordinated note (12.5%, due 3/16) | 3,938 | 4,000 | 3,938 | 4,000 | |||||||||||||||||
reports and national | Preferred stock (333 shares) | 333 | 333 | 333 | 333 | ||||||||||||||||||
databases for the | Common stock (16,667 shares) | 167 | 167 | 167 | 167 | ||||||||||||||||||
integrated healthcare | |||||||||||||||||||||||
delivery system |
7
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|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Reed Group, Ltd. | Medical disability management | Senior secured loan (6.0%, due 12/13) | 11,903 | 10,186 | 11,903 | 10,186 | ||||||||||||||||||
services provider | Senior subordinated loan (15.8%, due 12/13)(2) | 19,199 | 15,260 | 19,199 | 15,260 | |||||||||||||||||||
Common equity | 1,800 | 28 | 1,800 | 28 | ||||||||||||||||||||
Regency Healthcare Group, LLC(5) | Hospice provider | Preferred member interest | 1,302 | 1,898 | 1,302 | 1,898 | ||||||||||||||||||
The Schumacher Group of Delaware, Inc. | Outsourced physician service provider | Senior subordinated note (12.1%, due 7/13)(2) | 36,172 | 36,138 | 36,172 | 36,138 | ||||||||||||||||||
Soteria Imaging Services, LLC(5) | Outpatient medical imaging provider | Junior secured loan (11.3%, due 11/10) | 4,216 | 4,210 | 4,216 | 4,210 | ||||||||||||||||||
Preferred member interest | 1,881 | 1,279 | 1,881 | 1,279 | ||||||||||||||||||||
Univita Health, Inc. | Outsourced services provider | Senior subordinated loan (15.0%, due 12/14) | 20,500 | 20,500 | 20,500 | 20,500 | ||||||||||||||||||
VOTC Acquisition Corp. | Radiation oncology care provider | Senior secured loan (13.0%, due 7/12)(2) | 17,417 | 17,417 | 17,417 | 17,417 | ||||||||||||||||||
Preferred stock (3,888,222 shares) | 8,748 | 3,800 | 8,748 | 3,800 | ||||||||||||||||||||
Total | 438,337 | 397,958 | 147,184 | 124,270 | 585,521 | 522,228 | ||||||||||||||||||
ServicesOther | ||||||||||||||||||||||||
3SI Security Systems, Inc. | Cash protection systems provider | Senior subordinated note (16.0%, due 8/13)(3) | 20,443 | 9,542 | 20,443 | 9,542 | ||||||||||||||||||
Subordinated loan (18.0%, due 8/13)(2)(3) | 9,030 | | 9,030 | | ||||||||||||||||||||
American Residential Services, LLC | Plumbing, heating and air-conditioning services | Junior secured loan (12.0%, due 4/15)(2) | 20,608 | 20,195 | 20,608 | 20,195 | ||||||||||||||||||
Avborne, Inc.(4) | Maintenance, repair and overhaul service provider | Common stock (27,500 shares) | | 39 | | 39 | ||||||||||||||||||
Aviation Properties Corporation(4) | Aviation services | Common stock (100 shares) | 123 | | 123 | | ||||||||||||||||||
Coverall North America, Inc.(4) | Commercial janitorial service provider | Senior secured loan (12.0%, due 7/11) | 31,573 | 31,573 | 31,573 | 31,573 | ||||||||||||||||||
Senior subordinated note (15.0%, due 7/11)(2) | 5,555 | 5,555 | 5,555 | 5,555 | ||||||||||||||||||||
Common stock (763,333 shares) | 14,361 | 11,386 | 14,361 | 11,386 | ||||||||||||||||||||
Diversified Collection Services, Inc. | Collections services | Senior secured loan (9.50%, due 2/11) | 13,027 | 14,276 | 13,027 | 14,276 | ||||||||||||||||||
Senior secured loan (13.8%, due 8/11) | 9,423 | 9,423 | 9,423 | 9,423 | ||||||||||||||||||||
Preferred stock (14,927 shares) | 169 | 269 | 169 | 269 | ||||||||||||||||||||
Common stock (592,820 shares) | 295 | 402 | 734 | 1,400 | 1,029 | 1,802 | ||||||||||||||||||
Driven Brands, Inc.(5)(6) | Automotive aftermarket service provider | Junior subordinated notes (15.0%, due 7/15) | 42,848 | 43,024 | 42,848 | 43,024 | ||||||||||||||||||
Subordinated loan (18.0%, due 7/15)(2) | 48,799 | 48,875 | 48,799 | 48,875 | ||||||||||||||||||||
Common stock (3,772,098 shares) | 9,516 | 3,000 | 9,516 | 3,000 | ||||||||||||||||||||
GCA Services Group, Inc. | Custodial services | Senior secured loan (12.0%, due 12/11) | 37,802 | 37,889 | 37,802 | 37,889 | ||||||||||||||||||
Growing Family, Inc. and GFH | Photography services | Senior secured revolving loan (due 8/11)(2)(3) | 1,513 | 303 | 1,513 | 303 |
8
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|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Holdings, LLC | Senior secured loan (due 8/11)(2)(3) | 15,282 | 3,056 | 15,282 | 3,056 | |||||||||||||||||||
Common stock (552,430 shares) | 872 | | 872 | | ||||||||||||||||||||
NPA Acquisition, LLC | Powersport vehicle auction operator | Junior secured loan (7.0%, due 2/13) | 12,000 | 12,000 | 12,000 | 12,000 | ||||||||||||||||||
Common units (1,709 shares) | 1,000 | 2,570 | 1,000 | 2,570 | ||||||||||||||||||||
PODS Funding Corp. | Storage and warehousing provider | Senior subordinated loan (15.0%, due 6/15) | 25,125 | 25,125 | 25,125 | 25,125 | ||||||||||||||||||
Subordinated loan (16.7%, due 12/15) | 5,079 | 5,070 | 5,079 | 5,070 | ||||||||||||||||||||
Tradesmen International, Inc. | Construction labor support | Junior secured loan (15.0%, due 12/12) | 39,793 | 11,532 | 39,793 | 11,532 | ||||||||||||||||||
Trover Solutions, Inc. | Healthcare collections services | Junior subordinated loan (12.0%, due 11/12)(2) | 53,674 | 51,270 | 53,674 | 51,270 | ||||||||||||||||||
United Road Towing, Inc. | Towing company | Junior secured loan (11.8%, due 1/14) | 18,993 | 18,367 | 18,993 | 18,367 | ||||||||||||||||||
Web Services Company, LLC | Laundry service and equipment provider | Senior secured loan (7.0%, due 8/14) | 4,607 | 4,938 | 4,607 | 4,938 | ||||||||||||||||||
Senior subordinated loan (14.0%, due 8/16)(2) | 44,023 | 41,821 | 44,023 | 41,821 | ||||||||||||||||||||
Total | 190,825 | 177,337 | 295,442 | 235,563 | 486,267 | 412,900 | ||||||||||||||||||
Consumer ProductsNon-Durable | ||||||||||||||||||||||||
Blacksmith Brands Holdings, Inc. and Blacksmith Brands, Inc. | Consumer products and Personal care manufacturer | Senior secured loan (12.5%, due 12/14) | 32,500 | 32,500 | 32,500 | 32,500 | ||||||||||||||||||
Bushnell, Inc. | Sports optics manufacturer | Junior secured loan (6.8%, due 2/14) | 40,217 | 30,456 | 40,217 | 30,456 | ||||||||||||||||||
Gilchrist & Soames, Inc. | Personal care manufacturer | Senior subordinated loan (13.4%, due 10/13) | 24,310 | 23,181 | 24,310 | 23,181 | ||||||||||||||||||
The Homax Group, Inc. | Home improvement products manufacturer | Senior secured revolver (8.0% due 10/12)(2) | 653 | 648 | 653 | 648 | ||||||||||||||||||
Senior subordinated note (14.5%, due 4/14)(2) | 13,649 | 9,804 | 13,649 | 9,804 | ||||||||||||||||||||
Preferred stock (76 shares) | 76 | | 76 | | ||||||||||||||||||||
Common stock (24 shares) | 5 | | 5 | | ||||||||||||||||||||
Warrants | 954 | | 954 | | ||||||||||||||||||||
Innovative Brands, LLC | Consumer products and personal care manufacturer | Senior secured loan (15.5%, due 9/11) | 17,079 | 17,079 | 17,079 | 17,079 | ||||||||||||||||||
Making Memories Wholesale, Inc.(4) | Scrapbooking branded products manufacturer | Senior secured loan (10.0%, due 8/14) | 7,770 | 9,750 | 7,770 | 9,750 | ||||||||||||||||||
Senior secured loan (15.0%, due 8/14)(2) | 4,062 | 514 | 4,062 | 514 | ||||||||||||||||||||
Common stock (100 shares) | | | | | ||||||||||||||||||||
The Step2 Company, LLC | Toy manufacturer | Senior secured loan (11.0%, due 4/12)(2) | 93,937 | 89,614 | 93,937 | 89,614 | ||||||||||||||||||
Equity interests | 2,156 | 705 | 2,156 | 705 | ||||||||||||||||||||
The Thymes, LLC(4) | Cosmetic products manufacturer | Preferred stock (8.0%, 6,283 shares)(2) | 6,785 | 6,107 | 6,785 | 6,107 | ||||||||||||||||||
Common stock (5,400 shares) | | | | |
9
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|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Woodstream Corporation(6) | Pest control, wildlife caring and control | Senior subordinated note (12.0%, due 2/15) | 89,693 | 77,400 | 89,693 | 77,400 | ||||||||||||||||||
products manufacturer | Common stock (6,960 shares) | 6,961 | 2,700 | 6,961 | 2,700 | |||||||||||||||||||
Total | 68,196 | 65,950 | 272,611 | 234,508 | 340,807 | 300,458 | ||||||||||||||||||
Restaurants and Food Services | ||||||||||||||||||||||||
ADF Capital, Inc. and ADF Restaurant Group, LLC | Restaurant owner and operator | Senior secured revolving loan(6.5%, due 11/12) (2) | 3,418 | 3,418 | 3,418 | 3,418 | ||||||||||||||||||
Senior secured loan (12.5%, due 11/13)(2) | 34,629 | 34,623 | 34,629 | 34,623 | ||||||||||||||||||||
Promissory note (12.0%, due 11/16)(2) | 13,093 | 13,105 | 13,093 | 13,105 | ||||||||||||||||||||
Warrants to purchase 0.61 shares | | 2,719 | | 2,719 | ||||||||||||||||||||
Encanto Restaurants, Inc. | Restaurant owner and operator | Junior secured loan (11.0%, due 8/13)(2) | 24,996 | 23,746 | 24,996 | 23,746 | ||||||||||||||||||
Hot Light Brands, Inc.(4) | Restaurant owner and operator | Senior secured loan (9.0%, due 2/11)(3) | 29,257 | 9,116 | 29,257 | 9,116 | ||||||||||||||||||
Common stock (93,500 shares) | 5,151 | | 5,151 | | ||||||||||||||||||||
Hot Stuff Foods, LLC(4) | Convenience food service retailer | Senior secured loan (3.7%, due 2/12) | 44,602 | 44,697 | 44,602 | 44,697 | ||||||||||||||||||
Junior secured loan (7.2% due 8/12)(3) | 31,237 | 35,549 | 31,237 | 35,549 | ||||||||||||||||||||
Senior subordinated note (15.0%, due 2/13)(2)(3) | 31,401 | 12,691 | 31,401 | 12,691 | ||||||||||||||||||||
Subordinated note (16.0%, due 2/13)(2)(3) | 20,749 | | 20,749 | | ||||||||||||||||||||
Common stock (1,147,453 shares) | 56,187 | | 56,187 | | ||||||||||||||||||||
Huddle House, Inc.(4) | Restaurant owner and operator | Senior subordinated note (15.0%, due 12/15)(2) | 19,646 | 19,646 | 19,646 | 19,646 | ||||||||||||||||||
Common stock (358,428 shares) | 36,348 | 3,919 | 36,348 | 3,919 | ||||||||||||||||||||
OTG Management, Inc. | Airport restaurant operator | Junior secured loan (20.5%, due 6/13)(2) | 16,149 | 16,149 | 16,149 | 16,149 | ||||||||||||||||||
Warrants to purchase 89,000 shares | | 1,102 | | 1,102 | ||||||||||||||||||||
S.B. Restaurant Company | Restaurant owner and operator | Senior secured loan (11.8%, due 4/11) | 38,207 | 32,693 | 38,207 | 32,693 | ||||||||||||||||||
Preferred stock (46,690 shares) | 117 | | 117 | | ||||||||||||||||||||
Warrants | 534 | | 534 | | ||||||||||||||||||||
Vistar Corporation and Wellspring Distribution | Food service distributor | Senior subordinated note (13.5%, due 5/15) | 73,625 | 69,944 | 73,625 | 69,944 | ||||||||||||||||||
Corporation | Class A non-voting common stock (1,366,120 shares) | 7,500 | 4,050 | 7,500 | 4,050 | |||||||||||||||||||
Total | 173,410 | 168,856 | 313,436 | 158,311 | 486,846 | 327,167 | ||||||||||||||||||
Beverage, Food and Tobacco | ||||||||||||||||||||||||
3091779 Nova Scotia Inc. | Baked goods manufacturer | Senior secured revolving loan (8.0%, due 1/10) | 2,401 | 2,463 | 2,401 | 2,463 | ||||||||||||||||||
Junior secured loan (14.0%, due 1/10)(2) | 15,147 | 10,292 | 15,147 | 10,292 | ||||||||||||||||||||
Warrants to purchase 57,545 shares | | | | |
10
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Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Apple & Eve, LLC and US Juice Partners, LLC(5) | Juice manufacturer | Senior secured revolving loan (12.0%, due 10/13) | 3,000 | 3,000 | 3,000 | 3,000 | ||||||||||||||||||
Senior secured loan (12.0%, due 10/13) | 33,900 | 33,900 | 33,900 | 33,900 | ||||||||||||||||||||
Senior units (50,000 units) | 5,000 | 5,000 | 5,000 | 5,000 | ||||||||||||||||||||
Best Brands Corporation | Baked goods manufacturer | Senior secured loan (7.5%, due 12/12)(2) | 11,359 | 13,358 | 11,359 | 13,358 | ||||||||||||||||||
Junior secured loan (16.0%, due 6/13)(2) | 48,376 | 49,036 | 48,376 | 49,036 | ||||||||||||||||||||
Border Foods, Inc.(4) | Green chile and jalapeno products manufacturer | Senior secured loan (12.9%, due 3/12) | 29,064 | 34,126 | 29,064 | 34,126 | ||||||||||||||||||
Preferred stock (100,000 shares) | 12,721 | 20,901 | 12,721 | 20,901 | ||||||||||||||||||||
Common stock (260,467 shares) | 3,847 | 9,663 | 3,847 | 9,663 | ||||||||||||||||||||
Bumble Bee Foods, LLC and BB Co-Invest LP | Canned seafood manufacturer | Common stock (4,000 shares) | 4,000 | 6,760 | 4,000 | 6,760 | ||||||||||||||||||
Charter Baking Company, Inc. | Baked goods manufacturer | Senior subordinated note (13.0%, due 2/13)(2) | 5,883 | 5,883 | 5,883 | 5,883 | ||||||||||||||||||
Preferred stock (6,258 shares) | 2,500 | 1,725 | 2,500 | 1,725 | ||||||||||||||||||||
Distant Lands Trading Co. | Coffee manufacturer | Senior secured revolving loan (8.3%, due 11/11) | 8,284 | 7,852 | 8,284 | 7,852 | ||||||||||||||||||
Senior secured loan (13.0%, due 11/11) | 43,509 | 43,026 | 43,509 | 43,026 | ||||||||||||||||||||
Common stock (3,451 shares) | 3,451 | 1,046 | 3,451 | 1,046 | ||||||||||||||||||||
Ideal Snacks Corporation | Snacks manufacturer | Senior secured loan (8.5%, due 6/11) | 967 | 958 | 967 | 958 | ||||||||||||||||||
Total | 131,566 | 131,417 | 101,843 | 117,572 | 233,409 | 248,989 | ||||||||||||||||||
Education | ||||||||||||||||||||||||
Campus Management Corp. and Campus Management | Education software developer | Senior secured loan (13.0%, due 8/13)(2) | 42,486 | 42,486 | 42,486 | 42,486 | ||||||||||||||||||
Acquisition Corp.(5) | Preferred stock (8.0%, 493,147 shares)(2) | 9,668 | 13,750 | 9,668 | 13,750 | |||||||||||||||||||
Community Education Centers, Inc. | Offender re-entry and in-prison treatment services provider | Senior subordinated loan (21.5%, due 11/13)(2) | 37,307 | 35,869 | 37,307 | 35,869 | ||||||||||||||||||
eInstruction Corporation | Developer, manufacturer and retailer of | Junior secured loan (7.8%, due 7/14) | 16,942 | 15,475 | 16,942 | 15,475 | ||||||||||||||||||
educational products | Subordinated loan (16.0%, due 1/15)(2) | 19,795 | 18,699 | 19,795 | 18,699 | |||||||||||||||||||
Common stock (2,406 shares) | 2,500 | 1,050 | 2,500 | 1,050 | ||||||||||||||||||||
ELC Acquisition Corporation | Developer, manufacturer and retailer of | Senior secured loan (3.5%, due 11/12) | 162 | 157 | 162 | 157 | ||||||||||||||||||
educational products | Junior secured loan (7.2%, due 11/13) | 8,333 | 8,167 | 8,333 | 8,167 | |||||||||||||||||||
Instituto de Banca y Comercio, Inc. | Private school operator | Senior secured loan (8.5%, due 3/14) | 11,700 | 11,700 | 11,700 | 11,700 | ||||||||||||||||||
Leeds IV Advisors, Inc. | Senior subordinated loan (16.0%, due 6/14)(2) | 30,877 | 30,877 | 30,877 | 30,877 | |||||||||||||||||||
Preferred stock (306,388 shares) | 1,456 | 3,925 | 1,456 | 3,925 | ||||||||||||||||||||
Common stock (354,863 shares) | 89 | 4,546 | 89 | 4,546 | ||||||||||||||||||||
JTC Education Holdings, Inc. | Postsecondary school operator | Senior secured loan (12.5%, due 12/14) | 31,250 | 31,250 | 31,250 | 31,250 |
11
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Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Lakeland Finance, LLC | Private school operator | Junior secured loan (11.5%, due 12/12) | 26,654 | 26,654 | 26,654 | 26,654 | ||||||||||||||||||
R3 Education, Inc. | Medical school operator | Senior secured loan (9.0%, due 6/10) | 791 | 1,101 | 791 | 1,101 | ||||||||||||||||||
Senior secured loan (9.0%, due 12/12) | 21,388 | 29,773 | 21,388 | 29,773 | ||||||||||||||||||||
Senior secured loan (13.0%, due 4/13)(2) | 1,244 | 3,186 | 1,244 | 3,186 | ||||||||||||||||||||
Preferred stock (8,800 shares) | 2,200 | 1,100 | 2,200 | 1,100 | ||||||||||||||||||||
Warrants to purchase 27,890 shares | | | | | ||||||||||||||||||||
Member interest | 15,800 | 11,515 | 15,800 | 11,515 | ||||||||||||||||||||
Total | 204,098 | 220,187 | 76,544 | 71,093 | 280,642 | 291,280 | ||||||||||||||||||
Manufacturing | ||||||||||||||||||||||||
Arrow Group Industries, Inc. | Residential and outdoor shed manufacturer | Senior secured loan (5.3%, due 4/10) | 5,653 | 4,437 | 5,653 | 4,437 | ||||||||||||||||||
Component Hardware Group, Inc. | Commercial equipment manufacturer | Senior subordinated note (13.5%, due 1/13)(2)(3) | 18,947 | 16,695 | 18,947 | 16,695 | ||||||||||||||||||
Emerald Performance Materials, LLC | Polymers and performance materials manufacturer | Senior secured loan (8.3%, due 5/11) | 8,928 | 8,839 | 8,928 | 8,839 | ||||||||||||||||||
Senior secured loan (8.5%, due 5/11) | 626 | 620 | 626 | 620 | ||||||||||||||||||||
Senior secured loan (10.0%, due 5/11) | 1,604 | 1,556 | 1,604 | 1,556 | ||||||||||||||||||||
Senior secured loan (16.0%, due 5/11)(2) | 4,937 | 4,838 | 4,937 | 4,838 | ||||||||||||||||||||
Jakel, Inc.(4) | Electric motor manufacturer | Senior subordinated loan (15.5%, due 3/08)(2)(3) | 748 | | 748 | | ||||||||||||||||||
NetShape Technologies, Inc. | Metal precision engineered components manufacturer | Senior secured loan (4.0%, due 2/13) | 972 | 335 | 972 | 335 | ||||||||||||||||||
Penn Detroit Diesel Allison, LLC(4) | Diesel engine manufacturer | Member interest | 20,081 | 15,258 | 20,081 | 15,258 | ||||||||||||||||||
Postle Aluminum Company, LLC(5) | Aluminum distribution provider | Senior secured loan (6.0%, due 10/12)(2)(3) | 34,876 | 16,054 | 34,876 | 16,054 | ||||||||||||||||||
Senior subordinated loan (3.0%, due 10/12)(2)(3) | 23,868 | | 23,868 | | ||||||||||||||||||||
Member interest | 2,174 | | 2,174 | | ||||||||||||||||||||
Reflexite Corporation(4) | Developer and manufacturer of | Senior subordinated loan (18.0%, due 11/14)(2) | 16,785 | 16,785 | 16,785 | 16,785 | ||||||||||||||||||
high-visibility reflective products | Common stock (1,821,860 shares) | 27,435 | 24,595 | 27,435 | 24,595 | |||||||||||||||||||
Saw Mill PCG Partners LLC | Precision components | Common units (1,000 units) | 1,000 | | 1,000 | | ||||||||||||||||||
manufacturer | ||||||||||||||||||||||||
Service Champ, Inc.(4)(6) | Automotive aftermarket components supplier | Senior subordinated loan (15.5%, due 4/12)(2) | 27,696 | 27,696 | 27,696 | 27,696 | ||||||||||||||||||
Common stock (55,112 shares) | 11,145 | 28,071 | 11,145 | 28,071 | ||||||||||||||||||||
Stag-Parkway, Inc.(4) | Automotive aftermarket components supplier | Junior subordinated loan (10.0%, due 7/12) | 19,004 | 19,004 | 19,004 | 19,004 | ||||||||||||||||||
Common stock (25,000 shares) | 32,686 | 14,226 | 32,686 | 14,226 | ||||||||||||||||||||
STS Operating, Inc. | Hydraulic systems equipment and supplies provider | Senior subordinated note (11.0%, due 1/13) | 30,318 | 28,695 | 30,318 | 28,695 |
12
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Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
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Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Tappan Wire & Cable Inc. | Specialty wire and cable manufacturer | Senior secured loan (15.0%, due 8/14)(3) | 22,248 | 5,331 | 22,248 | 5,331 | ||||||||||||||||||
Common stock (12,940 shares) | 2,043 | | 2,043 | | ||||||||||||||||||||
Warrant | | | | | ||||||||||||||||||||
UL Holding Co., LLC | Petroleum product manufacturer | Senior secured loan (9.2%, due 12/12) | 13,896 | 13,200 | 13,896 | 13,200 | ||||||||||||||||||
Senior secured loan (14.0%, due 12/12) | 6,949 | 6,600 | 6,949 | 6,600 | ||||||||||||||||||||
Common units (100,000 units) | 500 | 500 | 500 | 500 | ||||||||||||||||||||
Universal Trailer Corporation | Livestock and specialty | Common stock (74,920 shares) | 7,930 | | 7,930 | | ||||||||||||||||||
trailer manufacturer | ||||||||||||||||||||||||
Total | 96,243 | 81,970 | 246,806 | 171,365 | 343,049 | 253,335 | ||||||||||||||||||
Retail | ||||||||||||||||||||||||
Apogee Retail, LLC | For-profit thrift retailer | Senior secured loan (5.2%, due 3/12) | 43,168 | 40,578 | 43,168 | 40,578 | ||||||||||||||||||
Senior secured loan (16.0%, due 9/12)(2) | 22,480 | 22,480 | 22,480 | 22,480 | ||||||||||||||||||||
Dufry AG | Retail newsstand operator | Common stock (39,056 shares) | 3,000 | 2,638 | 3,000 | 2,638 | ||||||||||||||||||
Savers, Inc. and SAI Acquisition Corp. | For-profit thrift retailer | Senior subordinated note (12.0%, due 8/14)(2) | 25,847 | 25,847 | 25,847 | 25,847 | ||||||||||||||||||
Common stock (1,170,182 shares) | 4,500 | 5,840 | 4,500 | 5,840 | ||||||||||||||||||||
Things Remembered, Inc. and TRM Holdings Corporation | Personalized gift retailer | Senior secured loan (6.5%, due 9/12)(2) | 39,409 | 31,544 | 39,409 | 31,544 | ||||||||||||||||||
Preferred stock (153 shares) | 1,800 | | 1,800 | | ||||||||||||||||||||
Common stock (800 shares) | 200 | | 200 | | ||||||||||||||||||||
Warrants to purchase 859 common shares | | | | | ||||||||||||||||||||
Total | 140,404 | 128,927 | | | 140,404 | 128,927 | ||||||||||||||||||
Consumer ProductsDurable | ||||||||||||||||||||||||
Carlisle Wide Plank Floors, Inc. | Hardwood floor manufacturer | Senior secured loan (12.0%, due 6/11) | 1,638 | 1,544 | 1,638 | 1,544 | ||||||||||||||||||
Common stock (345,056 shares) | 345 | | 345 | | ||||||||||||||||||||
Direct Buy Holdings, Inc. and Direct Buy Investors, LP(5) | Membership based buying club franchisor and | Senior secured loan (6.8%, due 11/12) | 2,052 | 1,803 | 2,052 | 1,803 | ||||||||||||||||||
operator | Senior subordinated note (16.0%, due 5/13)(2) | 78,181 | 71,856 | 78,181 | 71,856 | |||||||||||||||||||
Limited partnership interest | 8,000 | 1,500 | 8,000 | 1,500 | ||||||||||||||||||||
Limited partnership interest | 10,000 | 3,000 | 10,000 | 3,000 | ||||||||||||||||||||
Havco Wood Products LLC | Laminated oak and fiber-reinforced composite flooring manufacturer for trailers | Member interest | 910 | | 910 | | ||||||||||||||||||
Total | 12,052 | 4,803 | 89,074 | 74,900 | 101,126 | 79,703 | ||||||||||||||||||
Computers and Electronics | ||||||||||||||||||||||||
Network Hardware Resale, Inc. | Networking equipment resale provider | Senior secured loan (12.0%, due 12/11)(2) | 16,088 | 16,031 | 16,088 | 16,031 | ||||||||||||||||||
Convertible subordinated loan (9.8%, due 12/15)(2) | 15,998 | 15,998 | 15,998 | 15,998 | ||||||||||||||||||||
RedPrairie Corporation | Software manufacturer | Junior secured loan (6.8%, due 1/13) | 15,300 | 14,535 | 15,300 | 14,535 |
13
|
|
|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
TZ Merger Sub, Inc. | Computers and electronics | Senior secured loan (7.5%, due 7/15) | 4,711 | 4,818 | 4,711 | 4,818 | ||||||||||||||||||
X-rite, Incorporated | Artwork software manufacturer | Junior secured loan (14.4%, due 7/13) | 10,906 | 10,906 | 10,906 | 10,906 | ||||||||||||||||||
Total | 30,917 | 30,259 | 32,086 | 32,029 | 63,003 | 62,288 | ||||||||||||||||||
Printing, Publishing and Media | ||||||||||||||||||||||||
Canon Communications LLC | Print publications services | Junior secured loan (13.8%, due 11/11)(2) | 24,147 | 19,331 | 24,147 | 19,331 | ||||||||||||||||||
EarthColor, Inc. | Printing management services | Subordinated note (15.0%, due 11/13)(2)(3) | 123,385 | | 123,385 | | ||||||||||||||||||
Common stock (63,438 shares) | 63,438 | | 63,438 | | ||||||||||||||||||||
Warrants | | | | | ||||||||||||||||||||
LVCG Holdings LLC(4) | Commercial printer | Member interest | 6,600 | 330 | 6,600 | 330 | ||||||||||||||||||
National Print Group, Inc. | Printing management services | Senior secured revolving loan (9.0%, due 3/12) | 1,611 | 870 | 1,611 | 870 | ||||||||||||||||||
Senior secured loan (16.0%, due 3/12)(2) | 8,095 | 4,422 | 8,095 | 4,422 | ||||||||||||||||||||
Preferred stock (9,344 shares) | 2,000 | | 2,000 | | ||||||||||||||||||||
The Teaching Company, LLC and The Teaching Company | Education publications provider | Senior secured loan (10.5%, due 9/12) | 28,000 | 28,000 | 28,000 | 28,000 | ||||||||||||||||||
Holdings, Inc. | Preferred stock (29,969 shares) | 2,997 | 3,872 | 2,997 | 3,872 | |||||||||||||||||||
Common stock (15,393 shares) | 3 | 4 | 3 | 4 | ||||||||||||||||||||
Total | 73,453 | 56,829 | 186,823 | | 260,276 | 56,829 | ||||||||||||||||||
Aerospace & Defense | ||||||||||||||||||||||||
AP Global Holdings, Inc. | Safety and security equipment manufacturer | Senior secured loan (4.8%, due 10/13) | 7,295 | 6,969 | 7,295 | 6,969 | ||||||||||||||||||
ILC Industries, Inc. | Industrial products provider | Junior secured loan (11.5%, due 6/14) | 12,000 | 12,000 | 12,000 | 12,000 | ||||||||||||||||||
Thermal Solutions LLC and TSI Group, Inc. | Thermal management and electronics packaging | Senior secured loan (4.0%, due 3/11) | 462 | 444 | 462 | 444 | ||||||||||||||||||
manufacturer | Senior secured loan (4.5%, due 3/12) | 2,732 | 2,486 | 2,732 | 2,486 | |||||||||||||||||||
Senior subordinated notes (14.0%, due 3/13)(2) | 2,747 | 2,554 | 2,747 | 2,554 | ||||||||||||||||||||
Senior subordinated notes (14.3%, due 3/13)(2) | 5,583 | 5,191 | 5,583 | 5,191 | ||||||||||||||||||||
Preferred stock (71,552 shares) | 716 | 529 | 716 | 529 | ||||||||||||||||||||
Common stock (1,460,246 shares) | 15 | 11 | 15 | 11 | ||||||||||||||||||||
Wyle Laboratories, Inc. and Wyle Holdings, Inc. | Provider of specialized engineering, scientific and | Junior secured loan (15.0%, due 1/15) | 28,000 | 28,000 | 28,000 | 28,000 | ||||||||||||||||||
technical services | Senior preferred stock (8.0%, 775 shares)(2) | 96 | 80 | 96 | 80 | |||||||||||||||||||
Common stock (1,616,976 shares) | 2,004 | 1,600 | 2,004 | 1,600 | ||||||||||||||||||||
Total | 61,650 | 59,864 | | | 61,650 | 59,864 | ||||||||||||||||||
Telecommunications | ||||||||||||||||||||||||
American Broadband Communications, LLC | Broadband communication services | Senior subordinated loan (18.0%, due 11/14)(2) | 39,952 | 39,952 | 39,952 | 39,952 | ||||||||||||||||||
and American Broadband Holding Co. | Warrants to purchase 166 shares | | | | |
14
|
|
|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Startec Equity, LLC (4) | Communication services | Member interest | 211 | 65 | 211 | 65 | ||||||||||||||||||
Total Telecommunications | 39,952 | 39,952 | 211 | 65 | 40,163 | 40,017 | ||||||||||||||||||
Oil and Gas | ||||||||||||||||||||||||
Geotrace Technologies, Inc. | Reservoir processing, development services, and data management services | Warrants | 2,027 | 2,075 | 2,027 | 2,075 | ||||||||||||||||||
IAT Equity, LLC and Affiliates d/b/a Industrial Air Tool(4) | Industrial products distributor | Senior subordinated note (9.0%, due 6/14) | 6,000 | 6,000 | 6,000 | 6,000 | ||||||||||||||||||
Member interest | 7,500 | 5,485 | 7,500 | 5,485 | ||||||||||||||||||||
Total | | | 15,527 | 13,560 | 15,527 | 13,560 | ||||||||||||||||||
Environmental Services | ||||||||||||||||||||||||
AWTP, LLC | Water treatment services | Junior secured loan (due 12/12)(3) | 13,682 | 5,472 | 13,682 | 5,472 | ||||||||||||||||||
Mactec, Inc. | Engineering and | Class B-4 stock (16 shares) | | | | | ||||||||||||||||||
environmental | Class C stock (5,556 shares) | | 150 | | 150 | |||||||||||||||||||
services | ||||||||||||||||||||||||
Sigma International Group, Inc. | Water treatment parts manufacturer | Junior secured loan (16.0%, due 10/13) | 17,500 | 12,250 | 17,500 | 12,250 | ||||||||||||||||||
Universal Environmental Services, LLC(5) | Hydrocarbon recycling and related waste management services and products | Preferred member interest | 1,599 | | 1,599 | | ||||||||||||||||||
Waste Pro USA, Inc. | Waste management services | Preferred Class A common stock (14.0%, 611,615 shares)(2) | 12,263 | 13,263 | 12,263 | 13,263 | ||||||||||||||||||
Wastequip, Inc.(5) | Waste management equipment | Senior subordinated loan (12.5%, due 2/15)(2) | 13,030 | 1,968 | 13,030 | 1,968 | ||||||||||||||||||
manufacturer | Common stock (13,889 shares) | 1,389 | | 1,389 | | |||||||||||||||||||
Total | 57,864 | 33,103 | 1,599 | | 59,463 | 33,103 | ||||||||||||||||||
Cargo Transport | ||||||||||||||||||||||||
The Kenan Advantage Group, Inc. | Fuel transportation provider | Senior secured loan (3.0%, due 12/11) | 2,400 | 2,304 | 2,400 | 2,304 | ||||||||||||||||||
Senior subordinated note (13.0%, due 12/13)(2) | 26,125 | 25,603 | 26,125 | 25,603 | ||||||||||||||||||||
Preferred stock (8.0%, 10,984 shares)(2) | 1,454 | 1,932 | 1,454 | 1,932 | ||||||||||||||||||||
Common stock (30,575 shares) | 31 | 41 | 31 | 41 | ||||||||||||||||||||
Total | 30,010 | 29,880 | | | 30,010 | 29,880 | ||||||||||||||||||
Health Clubs | ||||||||||||||||||||||||
Athletic Club Holdings, Inc. | Premier health club operator | Senior secured loan (4.7%, due 10/13) | 14,234 | 12,526 | 14,234 | 12,526 | ||||||||||||||||||
Senior secured loan (6.8%, due 10/13) | 12,516 | 11,014 | 12,516 | 11,014 | ||||||||||||||||||||
Total | 26,750 | 23,540 | | | 26,750 | 23,540 | ||||||||||||||||||
Buildings and Real Estate | ||||||||||||||||||||||||
10th Street, LLC(5) | Document storage and management services | Senior subordinated note (13.0%, due 11/14)(2) | 22,234 | 22,325 | 22,234 | 22,325 | ||||||||||||||||||
Member interest | 422 | 475 | 422 | 475 | ||||||||||||||||||||
Option | 25 | 25 | 25 | 25 | ||||||||||||||||||||
Total | | | 22,681 | 22,825 | 22,681 | 22,825 | ||||||||||||||||||
15
|
|
|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
ContainersPackaging | ||||||||||||||||||||||||
Industrial Container Services, LLC (5) | Industrial container manufacturer | Senior secured revolving loan (5.8%, due 9/11) | 950 | 922 | 950 | 922 | ||||||||||||||||||
reconditioner and servicer | Senior secured loan (4.3%, due 9/11) | 11,807 | 11,453 | 11,807 | 11,453 | |||||||||||||||||||
Senior secured loan (5.8%, due 9/11) | 437 | 424 | 437 | 424 | ||||||||||||||||||||
Common stock (1,800,000 shares) | 1,800 | 8,550 | 1,800 | 8,550 | ||||||||||||||||||||
Total | 14,994 | 21,349 | | | 14,994 | 21,349 | ||||||||||||||||||
Grocery | ||||||||||||||||||||||||
Planet Organic Health Corp. | Organic grocery store operator | Junior secured loan (15.0%, due 7/13) | 11,291 | 10,746 | 11,291 | 10,746 | ||||||||||||||||||
Senior subordinated loan (17.0%, due 7/12)(2) | 12,572 | 9,416 | 12,572 | 9,416 | ||||||||||||||||||||
Total | 23,863 | 20,162 | | | 23,863 | 20,162 | ||||||||||||||||||
Hotels, Motels, Inns & Gaming | ||||||||||||||||||||||||
Crescent Equity Corporation(4) | Hospitality management services | Senior secured loan (10.0%, due 6/10) | 433 | 433 | 433 | 433 | ||||||||||||||||||
Subordinated notes (11.0%, due 9/11)(3) | 2,107 | | 2,107 | | ||||||||||||||||||||
Subordinated notes (11.0%, due 1/12)(3) | 7,189 | 1,020 | 7,189 | 1,020 | ||||||||||||||||||||
Subordinated notes (11.0%, due 9/12)(3) | 10,769 | 1,434 | 10,769 | 1,434 | ||||||||||||||||||||
Subordinated notes (11.0%, due 6/17)(3) | 12,007 | 1,678 | 12,007 | 1,678 | ||||||||||||||||||||
Common stock (174 shares) | 82,818 | | 82,818 | | ||||||||||||||||||||
Guaranty ($900) | | | | | ||||||||||||||||||||
Total | | | 115,323 | 4,565 | 115,323 | 4,565 | ||||||||||||||||||
HousingBuilding Materials | ||||||||||||||||||||||||
HB&G Building Products | Synthetic and wood product manufacturer | Senior subordinated loan (due 3/11)(2)(3) | 8,991 | 448 | 8,991 | 448 | ||||||||||||||||||
Common stock (2,743 shares) | 753 | | 753 | | ||||||||||||||||||||
Warrants to purchase 4,464 shares | 653 | | 653 | | ||||||||||||||||||||
Total | 10,397 | 448 | | | 10,397 | 448 | ||||||||||||||||||
Commercial Real Estate Finance | ||||||||||||||||||||||||
Commercial Mortgage Loans | 3 loans | Up to 6.99% | 29,660 | 28,372 | 29,660 | 28,372 | ||||||||||||||||||
2 loans | 7.00% - 8.99% | 1,845 | 1,819 | 1,845 | 1,819 | |||||||||||||||||||
1 loan | 9.00% - 10.99% | 6,480 | 3,281 | 6,480 | 3,281 | |||||||||||||||||||
2 loans | 15.00% and above | 3,970 | 1,943 | 3,970 | 1,943 | |||||||||||||||||||
Real Estate Owned | 5,962 | 6,405 | 5,962 | 6,405 | ||||||||||||||||||||
Real Estate Equity Interests | 27,263 | 13,987 | 27,263 | 13,987 | ||||||||||||||||||||
Total | | | 75,180 | 55,807 | 75,180 | 55,807 | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Other Companies | Other debt investments | (130 | ) | (134 | ) | (130 | ) | (134 | ) | |||||||||||||||
Other equity investments | 41 | 8 | 41 | 8 | ||||||||||||||||||||
Total | | | (89 | ) | (126 | ) | (89 | ) | (126 | ) | ||||||||||||||
16
|
|
|
Ares Capital | Allied Capital | Pro Forma Ares Capital | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Company
|
Description | Investment | Cost | Fair Value |
Cost | Fair Value |
Cost | Fair Value |
||||||||||||||||
Pro Forma Adjustments: | ||||||||||||||||||||||||
Actual sales of Allied Capital investments subsequent to December 31, 2009(6) | (172,468 | ) | (156,072 | ) | (172,468 | ) | (156,072 | ) | ||||||||||||||||
Estimated Purchase Price Allocation Adjustment(1) | | | | (140,587 | ) | |||||||||||||||||||
Total Investments | $ | 2,376,384 | $ | 2,171,814 | $ | 3,512,645 | $ | 1,975,046 | $ | 5,889,029 | $ | 4,006,273 | ||||||||||||
- (1)
- Upon
consummation of the merger and in accordance with ASC 805-10 (previously SFAS No. 141(r)), Business
Combinations, Ares Capital Corporation ("Ares Capital") will be required to allocate the purchase price of Allied Capital Corporation's ("Allied Capital") assets based on Ares
Capital's estimate of fair value and record such fair value as the cost basis and initial fair value of each such investment in Ares Capital's financial statements. In this regard, Ares Capital's
management determined that the aggregate adjustment to Allied Capital's investments approximates $140.6 million. As a result, such adjustment has been reflected in a single line item entitled
"Estimated Purchase Price Allocation Adjustment." However, a final determination of the fair value of Allied Capital's investments will be made after the merger is completed and, as a result, the
actual amount of this adjustment may vary from the preliminary amount set forth herein. Thus, the information set forth in the columns reflect historical amounts and have not been individually
adjusted to reflect the Estimated Purchase Price Allocation Adjustment.
- (2)
- Has
a payment-in-kind (PIK) interest feature.
- (3)
- Loan
is on non-accrual status at December 31, 2009.
- (4)
- As
defined in the Investment Company Act, we are an "Affiliated Person" to this portfolio company because we own 5% or more of its outstanding voting
securities and/or we have the power to exercise control over the management or policies of the portfolio company. In addition, as defined in the Investment Company Act, we "Control" this portfolio
company because we own more than 25% of its outstanding voting securities and/or we have the power to exercise control over the management or policies of the portfolio company.
- (5)
- As
defined in the Investment Company Act, we are an "Affiliated Person" to this portfolio company because we own 5% or more of its outstanding voting
securities and/or we have the power to exercise control over the management or policies of the portfolio company.
- (6)
- Allied Capital's investment was fully or partially sold subsequent to December 31, 2009. Total realized losses on these sales were $16 million and the related reversal of net unrealized depreciation was $16 million. A portion of Allied Capital's investment in Woodstream Corporation was sold to Ares Capital and portions of Allied Capital's investments in Service Champ, Inc. and Driven Brands Inc. were sold to Ares Capital and Ivy Hill Middle Market Credit Fund, Ltd. ("Ivy Hill I") subsequent to December 31, 2009.
See accompanying notes to pro forma condensed consolidated financial statements on the next page.
17
Ares Capital Corporation and Subsidiaries
Notes to Pro Forma Condensed Consolidated Financial Statements
Unaudited
(In thousands, except share and per share data unless otherwise stated)
1. BASIS OF PRO FORMA PRESENTATION
The unaudited pro forma condensed consolidated financial information related to the merger is included as of and for the year ended December 31, 2009. On October 26, 2009, Ares Capital and Allied Capital entered into the merger agreement. For the purposes of the pro forma condensed consolidated financial statements, the purchase price is currently estimated at approximately $817 million, which is based upon a price of $13.44 per share (closing price as of March 1, 2010) of Ares Capital common stock and an implied value per share of Allied Capital common stock of $4.37. The pro forma adjustments included herein reflect the conversion of Allied Capital common stock into Ares Capital common stock using an exchange ratio of 0.325 of a share of Ares Capital common stock for each of the approximately 179.9 million shares of Allied Capital common stock outstanding as of December 31, 2009.
The merger will be accounted for as an acquisition of Allied Capital by Ares Capital in accordance with the acquisition method of accounting as detailed in ASC 805-10 (previously SFAS No. 141(R)), Business Combinations. The acquisition method of accounting requires an acquirer to recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree based on their fair values as of the date of acquisition. As described in more detail in ASC 805-10, goodwill, if any, will be recognized as of the acquisition date, for the excess of the consideration transferred over the fair value of identifiable net assets acquired. If the total acquisition date fair value of the identifiable net assets acquired exceeds the fair value of the consideration transferred, the excess will be recognized as a gain. In connection with the merger and subsequent combination, the estimated fair value of the net assets to be acquired is currently anticipated to exceed the purchase price, and based on Ares Capital's preliminary purchase price allocation, a gain of approximately $291 million is currently expected to be recorded by Ares Capital in the period the merger and subsequent combination are completed.
Under the Investment Company Act rules, the regulations pursuant to Article 6 of Regulation S-X and the American Institute of Certified Public Accountants' Audit and Accounting Guide for Investment Companies, Ares Capital is precluded from consolidating any entity other than another investment company or an operating company that provides substantially all of its services and benefits to Ares Capital. Ares Capital's financial statements include its accounts and the accounts of all its consolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
In determining the value of the assets to be acquired, Ares Capital uses ASC 820-10 (previously SFAS No. 157), Fair Value Measurements, which expands the application of fair value accounting. ASC 820-10 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosure of fair value measurements. ASC 820-10 determines fair value to be the price that would be received for an investment in a current sale, which assumes an orderly transaction between market participants on the measurement date. ASC 820-10 requires Ares Capital to assume that the portfolio investment is sold in a principal market to market participants, or in the absence of a principal market, the most advantageous market, which may be a hypothetical market. Market participants are defined as buyers and sellers in the principal or most advantageous market that are independent, knowledgeable, and willing and able to transact. In accordance with ASC 820-10, Ares Capital has considered its principal market as the market in which Ares Capital exits its portfolio investments with the greatest volume and level of activity. ASC 820-10
18
specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. In accordance with ASC 820-10, these inputs are summarized in the three broad levels listed below:
-
- Level 1Valuations based on quoted prices in active markets for identical assets or liabilities that
Ares Capital has the ability to access.
-
- Level 2Valuations based on quoted prices in markets that are not active or for which all significant
inputs are observable, either directly or indirectly.
-
- Level 3Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
In addition to using the above inputs in investment valuations, Ares Capital continues to employ the relevant provisions of its valuation policy, which policy is consistent with ASC 820-10. Consistent with Ares Capital's valuation policy, the source of inputs, including any markets in which Ares Capital's investments are trading (or any markets in which securities with similar attributes are trading), are evaluated in determining fair value. Ares Capital's valuation policy considers the fact that because there is not a readily available market value for most of the investments in Ares Capital's portfolio, the fair value of its investments must typically be determined using unobservable inputs.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of Ares Capital's investments may fluctuate from period to period. Additionally, the fair value of Ares Capital's investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values that Ares Capital may ultimately realize. Further, such investments are generally subject to legal and other restrictions on resale or otherwise are less liquid than publicly traded securities. If Ares Capital were required to liquidate a portfolio investment in a forced or liquidation sale, Ares Capital may realize significantly less than the value at which Ares Capital has recorded it.
The following table presents fair value measurements of investments for the pro forma combined company as of December 31, 2009:
|
|
Fair Value Measurements Using |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Total | Level 1 | Level 2 | Level 3 | |||||||||
Investments |
$ | 4,006,273 | $ | | $ | 5,127 | $ | 4,001,146 |
The following tables present changes in investments that use Level 3 inputs between the actual December 31, 2009 amounts and those presented for the pro forma combined company as of December 31, 2009:
|
Ares Capital | Allied Capital | Pro Forma Adjustments |
Ares Capital Pro Forma Combined |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Actual balance as of December 31, 2009 |
$ | 2,171,814 | $ | 2,131,118 | $ | | $ | 4,302,932 | |||||
Estimated purchase price allocation adjustment |
| | (140,587 | ) | (140,587 | ) | |||||||
Actual sales of Allied Capital investments subsequent to December 31, 2009 |
| (156,072 | ) | | (156,072 | ) | |||||||
Net transfers in and/or out of Level 3 |
| | | | |||||||||
Pro Forma Balance as of December 31, 2009 |
$ | 2,171,814 | $ | 1,975,046 | $ | (140,587 | ) | $ | 4,006,273 | ||||
As of December 31, 2009, the net unrealized loss on the investments that use Level 3 inputs for the pro forma combined company was $1.8 billion.
19
In addition, changes in the market environment and other events that may occur over the life of the investments may cause the gains or losses ultimately realized on these investments to be different than would be realized based on the valuations currently assigned.
Certain other transactions that affect the purchase price that occurred subsequent to December 31, 2009 have been adjusted for in the unaudited pro forma condensed consolidated balance sheet. These primarily include sales of investments and receivables of $157 million for Allied Capital, the paydown of Allied Capital's $714 million of senior secured private debt and the $250 million of proceeds obtained from Allied Capital's senior secured term loan (the "Term Loan").
The unaudited pro forma condensed consolidated financial information includes preliminary estimated purchase price allocation adjustments to record the assets and liabilities of Allied Capital at their respective estimated fair values and represents Ares Capital's management's estimates based on available information. The pro forma adjustments included herein may be revised as additional information becomes available and as additional analyses are performed. The final allocation of the purchase price will be determined after the merger and subsequent combination are completed and after completion of a final analysis to determine the estimated fair values of Allied Capital's assets and liabilities. Accordingly, the final purchase accounting adjustments and integration charges may be materially different from the pro forma adjustments presented in this document. Increases or decreases in the estimated fair values of the net assets, commitments, and other items of Allied Capital as compared to the information shown in this document may change the amount of the purchase price allocated to goodwill or recognized as income in accordance with ASC 805-10.
Ares Capital has elected to be treated as a regulated investment company ("RIC") under subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and operates in a manner so as to qualify for the tax treatment applicable to RICs. In order to qualify as a RIC, among other things, Ares Capital is required to timely distribute to its stockholders generally at least 90% of its investment company taxable income, as defined by the Code, for each year. The unaudited pro forma condensed consolidated financial information reflects that Ares Capital has made and intends to continue to make the requisite distributions to its stockholders, which will generally relieve Ares Capital from U.S. federal income taxes.
The unaudited pro forma condensed consolidated financial information presented in this document is for illustrative purposes only and does not necessarily indicate the results of operations or the combined financial position that would have resulted had the merger and subsequent combination been completed at the beginning of the applicable period presented, nor the impact of expense efficiencies, asset dispositions, share repurchases and other factors. The unaudited pro forma condensed consolidated financial information is not indicative of the results of operations in future periods or the future financial position of the combined company.
2. PRELIMINARY PURCHASE ACCOUNTING ALLOCATIONS
The unaudited pro forma condensed consolidated financial information for the merger and subsequent combination includes the unaudited pro forma condensed consolidated balance sheet as of December 31, 2009 assuming the merger and subsequent combination were completed on December 31, 2009. The unaudited pro forma condensed consolidated income statement for the year ended December 31, 2009 was prepared assuming the merger and subsequent combination were completed on January 1, 2009.
The unaudited pro forma condensed consolidated financial information reflects the issuance of approximately 58.5 million shares of Ares Capital common stock in connection with the merger but does not reflect (1) the issuance of approximately 23 million shares of common stock pursuant to Ares Capital's public add-on equity offering in February 2010 (the "February Add-on Offering") or (2) Ares Capital's dividend declared on February 25, 2010 to stockholders of record as of March 15, 2010 and to
20
be distributed on March 31, 2010. The February Add-on Offering was completed at a price of $12.75 per share less an underwriting discount totaling approximately $0.6375 per share. Total proceeds received from the February Add-on Offering, net of underwriters' discount and offering costs, were approximately $277.5 million. The Ares Capital Pro Forma Combined net assets per share as of December 31, 2009 would have been $13.58 if the February Add-on Offering were reflected. Additionally, the unaudited pro forma condensed consolidated financial information does not reflect Allied Capital's intention to declare a special dividend of $0.20 per share to Allied Capital stockholders on the date the merger is approved by the affirmative vote of the holders of two-thirds of the shares of Allied Capital common stock outstanding and entitled to vote thereon. Allied Capital will fund the payment of the special dividend to the dividend paying agent on the closing of the merger with instructions to disburse such amounts to Allied Capital stockholders as of the record date as promptly as practicable.
The merger and subsequent combination will be accounted for using the purchase method of accounting; accordingly, Ares Capital's cost to acquire Allied Capital will be allocated to the assets and liabilities of Allied Capital at their respective fair values estimated by Ares Capital as of the acquisition date. The amount of the total acquisition date fair value of the identifiable net assets acquired that exceeds the total purchase price, if any, will be recognized as a gain. Accordingly, the pro forma purchase price has been allocated to the assets to be acquired and the liabilities to be assumed based on Ares Capital's currently estimated fair values as summarized in the following table:
Common stock issued |
$ | 785,978 | |||
Payment of "in-the-money" Allied Capital stock options |
31,405 | (1) | |||
Total purchase price |
$ | 817,383 | |||
Assets acquired: |
|||||
Investments |
$ | 1,834,459 | |||
Cash and cash equivalents |
31,405 | ||||
Other assets |
111,068 | ||||
Total assets acquired |
1,976,932 | ||||
Debt and other liabilities assumed |
(868,606 | ) | |||
Net assets acquired |
1,108,326 | ||||
Gain on acquisition of Allied Capital |
(290,943 | ) | |||
|
$ | 817,383 | |||
- (1)
- Holders of any "in-the-money" Allied Capital stock options have the right to either receive cash or stock. For the purposes of the pro forma condensed consolidated financial statements, it is assumed that the options will be paid in cash. As of March 1, 2010, no options had been exercised subsequent to December 31, 2009.
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3. PRELIMINARY PRO FORMA ADJUSTMENTS
The preliminary pro forma purchase accounting allocation included in the unaudited pro forma condensed consolidated financial information is as follows:
- A.
- To reflect Allied Capital's December 31, 2009 balance sheet, updated for changes subsequent to December 31, 2009:
|
Allied Capital Actual December 31, 2009 |
Pro Forma Adjustments(1) |
Adjusted Allied Capital December 31, 2009 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|
Investments |
$ | 2,131,118 | $ | (156,072 | ) | $ | 1,975,046 | |||
Cash and cash equivalents |
401,702 | (263,284 | ) | 138,418 | ||||||
Other assets |
132,677 | (7,979 | ) | 124,698 | ||||||
Total assets |
$ | 2,665,497 | $ | (427,335 | ) | $ | 2,238,162 | |||
Debt |
$ | 1,426,011 | $ | (430,467 | ) | 995,544 | ||||
Other liabilities |
41,284 | | 41,284 | |||||||
Total liabilities |
1,467,295 | (430,467 | ) | 1,036,828 | ||||||
Net assets |
1,198,202 | 3,132 | 1,201,334 | |||||||
Total liabilities and net assets |
$ | 2,665,497 | $ | (427,335 | ) | $ | 2,238,162 | |||
- (1)
- Primarily the result of sales of $157 million of certain investments and receivables for Allied Capital subsequent to December 31, 2009, the paydown of Allied Capital's $714 million of senior secured private debt and the $250 million of proceeds received from the Term Loan. Included within the $156 million of sales of investments were the sales of a portion of the investment in Woodstream Corporation to Ares Capital and sales of portions of the investments in Driven Brands, Inc. and Service Champ, Inc. to Ares Capital and Ivy Hill I.
- B.
- To reflect the acquisition of Allied Capital by the issuance of approximately 58.5 million shares of Ares Capital common stock. Below reflects the allocation of the purchase price on the basis of
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Ares Capital's current estimate of the fair value of assets to be acquired and liabilities to be assumed:
Components of purchase price:
|
Adjusted Allied Capital December 31, 2009 |
Pro Forma Adjustments |
Pro Forma | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Common stock issued |
$ | 785,978 | $ | | $ | 785,978 | |||||
Payment of "in-the-money" Allied Capital stock options(4) |
31,405 | | 31,405 | ||||||||
Total purchase price |
$ | 817,383 | $ | | $ | 817,383 | |||||
Assets acquired: |
|||||||||||
Investments |
$ | 1,975,046 | $ | (140,587 | )(1) | $ | 1,834,459 | ||||
Cash and cash equivalents |
138,418 | (107,013 | )(2)(3) | 31,405 | |||||||
Other assets |
124,698 | (13,630 | )(1) | 111,068 | |||||||
Total assets acquired |
2,238,162 | (261,230 | ) | 1,976,932 | |||||||
Debt and other liabilities assumed |
(1,036,828 | ) | 168,222 | (1)(2)(3) | (868,606 | ) | |||||
Net assets acquired |
1,201,334 | (93,008 | )(1)(2) | 1,108,326 | |||||||
Gain on acquisition of Allied Capital |
(383,951 | ) | 93,008 | (290,943 | ) | ||||||
Total |
$ | 817,383 | $ | | $ | 817,383 | |||||
- (1)
- Primarily
to reflect the allocation of purchase price to Allied Capital's assets and liabilities based on Ares Capital's current estimates of fair value.
There is no single approach for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio
investment while employing a consistently applied valuation process. See "Management's Discussion and Analysis of Financial Condition and Results of Allied CapitalResults of Operations"
in the joint proxy statement/prospectus, dated February 11, 2010 (the "Proxy Statement"), and "Management's Discussion and Analysis of Financial Condition and Results of OperationsResults
of Operations" in the Annual Report of Allied Capital on Form 10-K, filed with the SEC on February 26, 2010 (the "Allied Capital 10-K"). There were also adjustments made of
$111.1 million and $13.6 million to Allied Capital's debt and other assets, respectively, to mark them to fair value. Allied Capital's debt is currently carried at amortized cost. The
adjustment to other assets was primarily an adjustment to Allied Capital's capitalized debt costs, which are included in other assets and are also currently carried at amortized cost.
- (2)
- In
addition to the net effect of the fair value adjustments to Allied Capital's assets and liabilities, the net assets of Allied Capital were decreased for
various transaction costs expected to be incurred by Allied Capital related to the merger of approximately $49.9 million, including $35.4 million of other liabilities expected to be paid
within the 12 months following the merger.
- (3)
- Excess
available cash of $95.8 million from the Allied Capital transaction is assumed to be used to paydown certain outstanding Allied Capital debt.
- (4)
- Holders of any "in-the-money" Allied Capital stock options have the right to either receive cash or stock. For the purposes of the pro forma condensed consolidated financial statements, it is assumed that the options will be paid in cash. As of March 1, 2010, no options had been exercised subsequent to December 31, 2009.
- C.
- The net assets of the pro forma combined company were decreased for various transaction costs expected to be incurred by Ares Capital related to the merger of approximately $13.7 million as
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well as the assumed cash payment of $31.4 million of the "in-the-money" Allied Capital stock options.
- D.
- The
purchase price of certain investments in debt securities being acquired from Allied Capital is estimated by Ares Capital to be less than the expected
recovery value of such investments. In accordance with GAAP, subsequent to the effective time, Ares Capital will record the accretion to the expected recovery value in interest income over the
remaining term of the investment. Interest income has not been adjusted to reflect the accretion to the expected recovery value for the period presented. The accretion for the first 12 months
after the effective time is estimated to be approximately $13 million. However, there can be no assurance that such accretion will be more or less than such estimate.
- E.
- The
fair value of the outstanding debt assumed from Allied Capital is estimated by Ares Capital to be below the face amount of such debt. In accordance with
GAAP, subsequent to the effective time, Ares Capital will record accretion to the face amount in interest expense over the remaining term of the debt. Interest expense has not been adjusted to reflect
the accretion to the face value for the period presented. The accretion for the first 12 months after the effective time is estimated to be approximately $21 million. However, there can
be no assurance that such accretion will be more or less than such estimate.
- F.
- Base
management fees were computed based on 1.5% of average total assets other than cash and cash equivalents but including assets purchased with borrowed
funds per Ares Capital's investment advisory and management agreement with Ares Capital Management LLC ("Ares Capital Management").
- G.
- Incentive
management fees were recomputed based on the formula in Ares Capital's investment advisory and management agreement with Ares Capital Management.
- H.
- Adjustments
to other expenses were made to reflect compensation costs for Allied Capital's employees that would have been covered by the base management fees
paid to Ares Capital Management and therefore not incurred by Ares Capital. Additionally, all stock option costs were excluded as such costs would not exist at Ares Capital as there is no stock option
plan maintained by Ares Capital. Payments of stock option costs to employees would have been similarly incurred by Ares Capital in the form of incentive management fees paid to Ares Capital
Management. Lastly, any actual costs incurred related to the merger and subsequent combination, primarily various transaction costs, were also excluded.
- I.
- Total shares outstanding as of December 31, 2009 have been adjusted to reflect the following:
Ares Capital shares outstanding as of December 31, 2009 |
109,944,674 | |||
Estimated shares issued in connection with the merger reflected as outstanding for the period presented |
58,480,513 | |||
Ares Capital adjusted shares outstanding as of December 31, 2009 |
168,425,187 | * | ||
- *
- Does not reflect 22,957,993 shares issued in the February Add-on Offering.
Weighted average shares for the year ended December 31, 2009 have been adjusted to reflect the following:
|
For the Year Ended December 31, 2009 |
|||
---|---|---|---|---|
Ares Capital weighted average shares outstanding |
101,719,800 | |||
Estimated shares issued in connection with the merger reflected as outstanding for the period presented |
58,480,513 | |||
Ares Capital adjusted weighted average shares outstanding |
160,200,313 | |||
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